A British resident held for nearly five years at Guantanamo Bay is to be set free aftera breakthrough in negotiations between the US and Britain.

Bisher al-Rawi, 39, whose family escaped persecution in Iraq to live in London, was on a business trip when he was arrested in the Gambia after a tip-off by the Security Service, MI5.

In a statement to MPs, the Foreign Secretary, Margaret Beckett, said Mr Rawi would be "returned to the UK shortly as soon as practical arrangements have been made".

It is believed that the Americans only agreed to Mr Rawi's release because ministers gave personal assurances that they would take full responsibility for his security.

For many years the British Government had refused to help Mr Rawi and the eight other British residents still held by the Americans at the US naval base in Cuba because they did not have the same legal status as UK nationals.

Mr Rawi's lawyers and other human rights groups have now called for the release of all the remaining British resident detainees.

Zachary Katznelson, a lawyer for the UK-based charity Reprieve, who has represented the residents during their detention, said the decision to free his client showed there was no "justification or excuse" for not negotiating the freedom of the other men.

He said he thought the decision to help Mr Rawi was only taken because the Government did not want an embarrassing court case in which Britain's involvement in his capture would have been made public.

The High Court in London has already permitted the disclosure of classified documents linking MI5 to Mr Rawi's arrest.

Mr Katznelson said: "Mr Rawi helped MI5 as an interpreter and acted as a go-between with Abu Qatada [a terror suspect later arrested and detained by the British authorities]. All this would have... been very embarrassing for the government and... MI5."

Mr Rawi's lived with his mother, brother and sister in south London for 16 years. He was arrested in the Gambia, along with his brother, Wahab, and business partners, Jamil el-Banna and Abdullah el-Ganudi. Wahab and Mr Ganudi were both released because they were British citizens. Bisher and Mr Banna, who could only claim British residency, were taken by the Americans to Bagram airbase and then Guantanamo Bay.

Bisher and Wahab, 41, moved to Britain in the 1980s after their father fell under the suspicion of Saddam Hussein. They first lived in Cambridge, where they took their O-levels, before continuing their schooling at Millfield School, Somerset, and Concord College, Shropshire. They later attended separate universities.

In 1992 Wahab took British nationality while his brother decided to retain his Iraqi citizenship as he did not want to damage his ties with his home country.

But it was Wahab's business interests that took the two brothers to the Gambia in November 2002.

He told The Independent last year: "I had this business idea for a mobile peanut-oil processing factory. I had done the feasibility study; it was all ready to go. I had my team and we brought Bisher in on the deal towards the end."

Four days after his arrival in Gambia, Wahab went to Banjul airport to meet his brother and the other two men.

As Wahab approached his brother he became aware of a problem with immigration. Gambian officials had confiscated their passports and they were being taken to an interview room.

For the next three to four days the four men were moved around the Gambian National Intelligence Agency (NIA), alternately questioned by Americans and Gambians.

Four days after Wahab had met Bisher at the airport, they were taken from the NIA headquarters to a secret location in the Banjul suburbs. It was here that Bisher begged his brother to co-operate with the Americans because "we have nothing to hide".

Mr Ganudi and Wahab were separated from the other two and taken back to interrogation suites in the NIA building where the Americans began repeating the questions. A few days later they were told they could fly back to Britain. The other two were transferred to Guantanamo Bay.

Their lawyers allege that they have been tortured by guards and deprived of basic necessities during their five-year ordeal.

Last night Mr Rawi's family issued a short statement: "We are obviously delighted Bisher is coming home but until he is actually back with us we don't want to say anything else."

Ed Davey, Mr Rawi's Liberal Democrat MP in Kingston & Surbiton, welcomed the news.

"I am relieved that after nearly five years in prison without charge or trial my constituent is now being released from Guantanamo Bay," he said. "Everything I've learnt from his family, his lawyers, UK Government officials, journalists and even the US authorities tells me Bisher al-Rawi is not and has never been a threat to national or international security.

"His case should be a lesson to us all that when you ignore natural justice, injustice follows. Bisher's family have suffered hugely and I am utterly delighted for them that their loved one will soon be returning."

In her written statement to the Commons, Mrs Beckett said: "We have now agreed with the US authorities that Mr Rawi will be returned to the UK shortly, as soon as the practical arrangements have been made."

British residents held in Guantanamo Bay

JAMIL EL-BANNA

Jordanian. In Guantanamo since March 2003. Arrested, with Bisher al-Rawi, in the Gambia.

BINYAM MOHAMED

Ethiopian. In Guantanamo since September 2004. Indefinite leave to remain in UK. Travelled to Afghanistan in 2001.

SHAKER AAMER

Saudi Arabian. In Guantanamo since February 2002. Was applying for British nationality. Seized in Pakistan in 2002.

OMAR DEGHAYES

Libyan. In Guantanamo since August 2002. Allegedly appears on a "Chechnyan training video".

AHMED ERRACHIDI

Moroccan. In Guantanamo since May 2002. Worked in UK for 18 years. Accused of attending a terrorist training camp in 2001.

AHMED BELBACHA

Algerian. In Guantanamo since March 2002. Alleged to have attended a training camp.

ABDELNOUR SAMEUR

Algerian. In Guantanamo since June 2002. Went to Afghanistan in 2001 and was shot in Pakistan.

JAMAL (TONY) KIYEMBA

Uganda. In Guantanamo for more than three years. Was travelling in Pakistan when he was seized.